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Airport Resilience in the Face of COVID-19

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Airport Resilience in the Face of COVID-19 Airport resilience in the face of COVID-19 A discussion paper series AVIATION Airport resilience in the face of COVID-19 Contents Recommendations ...................................................................................................... 3 Sustaintaining and developing Britain’s airports after COVID-19 ......................... 3 Pandemic response .................................................................................................... 4 Testing ..........................................................................................................................4 Funding ......................................................................................................................... 5 Ensuring aviation remains the safest way to travel ................................................ 7 Contributors Lewis Girdwood, Chief Financial Officer, Esken Glyn Jones, Chief Executive Officer, London Southend Airport Willie McGillivray, Chief Operating Officer, London Southend Airport Clive Condie, Non-Executive Director, Esken and former Chairman of London Luton Airport Luke Hayhoe, Aviation Business Development Director, London Southend Airport Alison Griffin, Chief Executive, Southend-on-Sea Borough Council Kate Willard OBE, Thames Estuary Envoy and Chair Matthew Butters, Aviation Director, Pascall+Watson Andy Jefferson, Aviation Consultant, A&G Jefferson Limited Ian Lewis, Executive Director at Opportunity South Essex Nigel Addison Smith, Director, PA Consulting Claire Mulloy, PA Consulting AIRPORT RESILIENCE IN THE FACE OF COVID-19 2 AVIATION Recommendations • Government funding for COVID-19 testing and maintaining medical centres in airports • Extension of business rates relief for airports through 2021-2022 • Temporary suspension of Airline Passenger Duty (APD) • Expansion of Public Service Obligations (PSOs) for domestic routes • Government and Industry to lead on agreeing and implementing global air travel standards Sustaining and developing Britain’s airports after COVID-19 The COVID-19 pandemic has changed the aviation sector beyond measure. The sector has had to contend with wildly differing government responses and fast-changing regulations. Those working in the sector have been at the backbone of the global response, transporting critical supplies and maintaining necessary travel linkages. Aviation will be as vital to the recovery from the pandemic as it has been to the response, if not more so. London Southend Airport’s Chief Operating Officer Willie McGillivray says “Flight habits won’t change and there’s a lot of pent-up demand. People want to fly.” On average, regional airports support 8,700 jobs Employed onsite 31% Indirectly supported 69% Source: AOA 2014 But challenges remain. Even as the vaccine roll-out raises hopes that the worst impacts of the pandemic have passed, depressed demand, continued restrictions, and public health concerns will present impediments to aviation’s recovery for the foreseeable future. Ensuring the continued viability of Britain’s airports will be paramount to handling the economic recovery, enabling the UK’s residents to return to the skies and welcome visitors once more. As London Southend Airport CEO, Glyn Jones, notes, “the underlying strategic issue has to be about supporting sustainable growth in the long-term. Right now, there is an inevitable temptation to develop strategy based on the current pandemic context, but it would be a mistake to allow the last year to entirely dictate and define the sector’s future.” AIRPORT RESILIENCE IN THE FACE OF COVID-19 3 AVIATION Pandemic response Much has changed for the country’s airports over the course of the pandemic. Britain remained open to international travellers for weeks longer than many of our European neighbours, even after the country entered its first ‘lockdown’ on 16 March that resulted in a precipitous decline in domestic travel. As the Spring of 2020 dragged on, and it became clear that the virus would remain with us for some time, hundreds of airline routes were cancelled. Regulations for responsible travel have continued to change, and further adjustments are expected. On 8 January 2021, the Department for Transport announced it would require a negative COVID-19 test result issued in the previous 72 hours before boarding for travellers to the UK – the policy came into effect 15 January. On 27 January, the government announced a mandatory 10-day quarantine in government-provided accommodation for all inbound travellers from 33 ‘red list’ countries. To be fair to the UK Government, the pandemic has been completely unprecedented and there’s no guidebook on how to support aviation through these times. But many governments around the world are providing better support for their aviation industries. Willie McGillivray CHIEF OPERATING OFFICER, LONDON SOUTHEND AIRPORT To ensure the UK’s airports can sustain these continued challenges and prosper in the future, it is first necessary to examine how the sector has been impacted by the pandemic so far and to review how the government and other stakeholders have responded. Testing Testing for COVID-19 and limiting the travels of those who have tested positive, is essential to keeping the virus contained. While significant uncertainty reigned in the early days of the pandemic, it is now well understood that asymptomatic carriers of the disease are still highly infectious. However, testing at airports only began to be rolled out in October 2020, when Heathrow Airport contracted providers to perform rapid LAMP tests. Testing facilities at smaller airports have since come online. As vaccination programmes are being rolled out, considerations regarding requiring proof of vaccination before travel are also underway. We expect numerous countries to require proof of vaccination in addition to negative test results once travel demand increases. London Southend Airport CEO, Glyn Jones, argues that such efforts are going to be at the core of getting the sector going again, stating that “consumer confidence is key, therefore international coordination on questions like vaccine passports or testing regimes is critical to help prospective travellers feel assured to book travel now.” Airports will require an unprecedented level of medical facilities and support for travel to increase. Implementing the changes required should begin as soon as possible to ensure the chaotic roll-out of travel restrictions and testing requirements witnessed over the last year is not repeated. AIRPORT RESILIENCE IN THE FACE OF COVID-19 4 AVIATION Funding The government’s economic response to the COVID-19 pandemic, although extraordinary, was ultimately dwarfed, by the impact of the restrictions imposed on the aviation industry. Furlough programmes have provided an economic lifeline with the towns and localities that house the country’s airports, arguably among the most dependent on such support, with thousands of residents’ jobs in limbo. Even as domestic vaccination levels rise, residents and businesses will be at the whim of developments in other markets which is likely to mean many popular travel destinations continue to limit inbound travel. Even as the furlough scheme was extended again to run through the end of September 2021, uncertainty means many jobs and businesses are still precarious. The Government has provided short-term support to the wider economy through initiatives like the furlough scheme but there has been nothing that directly supports the needs of airports. Andy Jefferson AVIATION CONSULTANT, A&G JEFFERSON LIMITED AIRPORT RESILIENCE IN THE FACE OF COVID-19 5 AVIATION The government has stepped in to support the sector, albeit in a limited fashion. However, the government has not expanded public service obligation support for regional air access to London and other cross-country routes. Such measures will be necessary to ensure the economic viability of numerous routes across the country as travel demand picks up in line with vaccination rates. We’re an island. In order to do business with other countries we need to travel which makes flying vital. We take this for granted in the UK. Aviation is a really important plank in the structure of society and the economy. Matthew Butters AVIATION DIRECTOR, PASCALL+WATSON The government has begun to recognise the challenge the sector faces. In November 2020, Chancellor Rishi Sunak announced a £100m relief package for 2021 to help manage fixed costs. However, while the government has said that it has set support at the airports’ business rate liabilities for the fiscal year 2020/2021, capped at £8m per airport, in reality such support has been subject to numerous additional hurdles and many smaller airports have been left behind. While the support is overdue, it will address just some of the pain wrought on airports over the last year, and most airports have received far smaller sums. There is room for improvement, however, and Britain risks being disadvantaged without clearer support. Further afield, Germany and France have both moved to provide state support for airports through to at least 2024. Both have also prioritised supporting regional airlines. Governments further abroad, from the Middle East to South East Asia, have also pledged financial support for their airlines. The fierce competition witnessed amongst airlines, particularly amongst hubs for layovers, is likely to resume when the pandemic does begin to subside. The aviation sector and the country’s airports will require continued assistance throughout 2021 and beyond.
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